A SIMPLE document that explains insider trading basics. It illustrates the different levels of staff members and the restrictions and considerations associated with them. This is a great addition to a formal insider trading policy. Performensation can create custom versions (details and branding) for your company or your clients. Contact us for details. 415-625-3406 / info@performensation.com

1. 144
Affiliates Rule
144
Paperwork
The
Insider
Sec-on
16
Repor-ng
Officers Forms
3,
4
&
5
Trading
Pyramid Company
Designated
Insiders Trading
Windows
and
Blackout
Periods
General
Popula-on Material
Inside
InformaBon
This
insider
pyramid
provides
a
summary
of
basic
restric5ons
placed
on
the
trading
of
an
employer's
stock.
Each
area
in
the
pyramid
is
subject
to
all
restric5ons
to
its
right
and
those
below
it.
Possession
of
material,
nonpublic
informaBon
regarding
the
Issuer
by
any
officer,
director
or
employee
prohibits
the
individual
from
parBcipaBng
in
the
purchase
or
sale
of
stock,
including
most
types
of
stock
opBon
exercises.
General
Popula-on:
This
applies
to
anyone,
inside
or
outside
of
the
company,
who
may
wish
to
place
a
trade
in
the
company's
stock.
The
SEC
has
declared
it
illegal
to
place
a
trade
with
any
company's
stock
if
you
have
informaBon
about
that
company
that
would
cause
you
to
buy
or
sell
stock
that
has
NOT
BEEN
FORMALLY
RELEASED
TO
THE
PUBLIC.
A
formal
release
to
the
public
would
include
a
press
release
or
statement
by
an
authorized
company
official.
Generally
companies
allow
transacBons
following
a
period
of
1
or
2
business
days
aRer
the
informaBon
has
been
released
to
the
public.
Company
Designated
Insiders:
These
are
people
who
are
not
subject
to
any
formal
SEC
guidelines
(other
than
those
menBoned
above),
that
the
company
considers
to
have
regular
access
to
material
inside
knowledge.
These
individuals
are
subject
to
company
imposed
Trading
Windows
and
Blackout
Periods
to
ensure
that
they
do
not
trade
during
the
especially
delicate
Bmes
immediately
preceding
the
release
of
informaBon.
These
individuals
may
also
be
required
to
have
every
trade
pre-­‐cleared
by
a
compliance
officer.
Sec-on
16
Repor-ng
Officers:
These
are
individuals
that
the
SEC
considers
to
have
ready
access
to
material
inside
informaBon.
The
level
of
individual
varies
from
company
to
company
and
the
reporBng
officers
are
designated
by
the
company,
with
scruBny
by
the
SEC.
These
individuals
must
fill
out
a
Form
3
when
they
become
a
SecBon
16
reporter,
they
must
fill
out
Forms
4
within
2
business
days
in
which
there
was
reportable
acBvity.
And
they
must
fill
out
Forms
5
at
the
end
of
every
year.
The
SEC
must
be
aware
of
all
trades
transacted
by
this
group
and
will
invesBgate
any
trade(s)
that
looks
suspicious.
Fines
or
prosecuBon
will
follow
any
illegal
acBvity
by
this
group.
The
company
must
also
publish
in
their
year-­‐end
proxy
statement
any
individuals
who
have
filed
incorrectly
or
late.
The
company
may
allow
or
require
these
individuals
to
arrange
automated
“10b5-­‐1
Trading
Plans”
with
authorized
brokers.
These
plans
can
be
set-­‐up
during
periods
when
the
individual
does
not
hold
inside
informaBon
and
control
future
transacBons
without
individual
interacBon.
144
Affiliates:
The
SEC
not
only
considers
these
individuals
to
have
access
to
material
inside
informaBon,
but
they
also
consider
these
individuals
to
have
the
ability,
through
their
posiBon
or
holdings,
to
impact
that
informaBon.
144
Affiliates
are
designated
because
of
their
posiBon
of
perceived
control
in
the
company
or
because
of
the
the
amount
of
stock
they
hold
in
the
company.
These
individuals
must
fill
out
all
of
the
same
paperwork
as
SecBon
16
reporters
PLUS
144
paperwork
must
be
filed
for
every
trade
they
complete,
on
the
date
of
the
trade.
They
are
subject
to
selling
and
buying
restricBons,
including
certain
mandatory
hold
periods.
©
2011
-­‐
PerformensaBon www.performensaBon.com